Published November 12, 2008

Maybank Q1 profit falls by 22.2%

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(KUALA LUMPUR) Malaysia's top lender, Malayan Banking Bhd (Maybank), said yesterday that its first-quarter profit fell by 22.2 per cent, as net interest income fell and recovery of non-performing loans slowed down.

The state-controlled Maybank, which has been on a controversial overseas acquisition spree this year amid rising competition at home, warned of greater non-performing loans (NPLs) and a moderate loan growth amid a global economic downturn.

'The operating environment for the domestic banking sector is expected to become more challenging with moderate prospects for increasing loans growth and heightened risk of greater non-performing loans,' Maybank said in its quarterly report.

It added that net profit for the current financial year, ending June 30, 2009, would be lower than the previous year.

Maybank reported net profit of RM572.17 million (S$241.17 million) for the three months to Sept 30, compared with RM735.43 million in the year-ago period.

Analysts in Malaysia do not provide quarterly forecasts, but predict that earnings at Malaysian banks, like those of their global peers, will fall in coming months as the world economic slowdown curbs demand for new loans and slashes the value of assets such as property, leading to more bad debts.



Maybank's profitability may also be affected by the higher cost of borrowing inflicted by the global credit crunch, as the lender needs to raise funds to maintain capital adequacy ratios, analysts said.

Analysts expect that Maybank will need to raise up to RM11 billion to fund three acquisitions announced this year: Vietnam's An Binh Bank, Pakistan's MCB Bank and Bank Internasional Indonesia. -- Reuters